UTI Asset Management Company Limited Just Beat EPS By 5.5%: Here's What Analysts Think Will Happen Next

Shareholders of UTI Asset Management Company Limited (NSE:UTIAMC) will be pleased this week, given that the stock price is up 13% to ₹639 following its latest yearly results. The result was positive overall - although revenues of ₹12b were in line with what the analysts predicted, UTI Asset Management surprised by delivering a statutory profit of ₹38.97 per share, modestly greater than expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on UTI Asset Management after the latest results.

See our latest analysis for UTI Asset Management

Following the latest results, UTI Asset Management's three analysts are now forecasting revenues of ₹12.4b in 2022. This would be a modest 3.3% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to reduce 2.2% to ₹38.10 in the same period. Before this earnings report, the analysts had been forecasting revenues of ₹11.7b and earnings per share (EPS) of ₹32.21 in 2022. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a substantial gain in earnings per share in particular.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of ₹747, suggesting that the forecast performance does not have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values UTI Asset Management at ₹876 per share, while the most bearish prices it at ₹678. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that UTI Asset Management is forecast to grow faster in the future than it has in the past, with revenues expected to display 3.3% annualised growth until the end of 2022. If achieved, this would be a much better result than the 2.8% annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 10% annually for the foreseeable future. Although UTI Asset Management's revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around UTI Asset Management's earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. The consensus price target held steady at ₹747, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on UTI Asset Management. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for UTI Asset Management going out to 2023, and you can see them free on our platform here..

You still need to take note of risks, for example - UTI Asset Management has 1 warning sign we think you should be aware of.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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